Good question.
I can see where closed loop can be good (BMS can report cell imbalance so instead of the BMS totally disconnecting due to a runner cell, it can keep things online while it balances it out maybe, that sort of thing). I don't get the "fire hazard" part though. Even if a BMS fails to do its job (or is set incorrectly or w/e) and it lets a cell overcharge a good amount, since when does LFP catch fire just because the cell overcharged some? We've seen many cases on here where someone managed to overcharge their LFP cell well above 3.65v and the cell, while bloated, doesn't burn down the place. They aren't the "I'll-explode-if-you-look-at-me-funny" other cell chemistries.
Glad it sounds like they aren't going to void some warranty because of using open loop though.